Conversation
with Gold
(part 1)
Olaf Sztaba
Olafinvest
Research
June 18, 2003
We were
lucky enough to talk to gold itself. Here is the first part of
our conversation:
Olafinvest
Research (OR): Let's cut right to the chase. Are you in a bull
market or not?
Gold: August 1999 was a momentous
occasion for my well-being. The long-term trend has turned. I
started a secular bull market. The connotations of this event
are greater than most investors realize at this moment.
OR: If you are in a secular
bull market, why doesn't "the street" see that?
Gold: That's nothing new.
I went through 20 years of a brutal bear market and it does not
surprise me that so many "pros," still living in their
"fantasyland," cannot see that I am in a secular (long-term)
bull market.
Secondly, I
am used to the fact that each time I start a major bull market,
most of the investment public ignores me. That was the case at
the beginning of my huge bull market in the 70s and it is the
case today.
OR: So how come an average
investor can find out that you are already in a bull market?
Gold: It's quite easy. If
you still don't like me, it means I am in the bull marketHa!
Ha!
But getting
serious, take a look at the bullish sentiment towards me; it
is still pretty low. Secondly, take a look at the simplest and
most dependable technical indicators like the 30-month moving
average, the monthly MACD and long-term charts of major gold
stocks. See what is happening with the US dollar. Signs of a
bull market are out there. Learn to read them.
OR: Before we go more deeply
into those issues could you please remind us what you have done
so far?
Gold: I reached the bottom
of my 20-year bear market in August 1999 at $252. A huge rally
followed, sending my price to an October 1999 high of $327. Next,
a dramatic pullback took me to a low of $255 in February 2001.
Please note that this time I did not allow the bears to depress
my price below its previous low. Since then I have been having
a lot of fun.
OR: Well, you have had
a lot of fun. Unfortunately, some of your most loyal supporters
have been disappointed with your recent performance.
Gold: This problem is rooted
in the stock bubble of all time. I sense that many investors
expect me to go up every day and offer returns that could make
them rich overnight. It's not going to happen. Not at this stage
of my bull market.
Let's face
the facts. I am the best performing asset class in the last three
years. My trend is clearly up. After each up-move, however, I
have to take breaks. Now, after three years of almost continuous
run up, I am taking a longer break. I think I deserve that. Those
breaks allow me to gain more strength before I start another
run up. I also need them to shake out those amateurs who jump
on me each time I finish my next run. Believe me, it's hard to
run when you have this unprofessional and nervous crowd on your
back.
OR: If you don't like crowds,
then who was behind the demand side during the last three years?
Gold: Pros of the pros. Investors
with long-term consciousness. People who survived a bear know
what a bull looks like. They are able to read the signs of the
times. They can detect an important secular shift before others
do so. They see that a historic shift from soft assets to hard
assets is in the making. They accumulate me now, because they
know that I am in a limited quantity and they need to do it as
quietly as possible before the crowds jump in.
OR: When do you expect
this long-term accumulation process to be completed?
Gold: When examining long-term trends, there has been
a huge shift from soft assets towards hard assets (that's me)
during the last 3-4 years. This process is not going to end soon.
Initial accumulation, however, associated with my long-term bottoming
process, is close to its end.
OR: Let's go back to the
signs of your secular bull market. What's the story with the
US dollar?
Gold: I think it is no mystery
that we don't like each other. The greenback had a great run
in the 90s. The guy overextended his ride and is going to pay
for it. The trend has turned in my favour.
In order to
clear up the matter, let me say this. Do not think that my prosperity
is only the function of the US dollar. Yes, as I said, it helps
when he goes down BUT remember that I started a secular bull
market. Many people try to find reasons to explain my robust
performance, now and in the future, and it doesn't always work
that way. No need to be clever, just enjoy my bull ride.
OR: Earlier, you
mentioned a favourable action in gold stocks as a sign that you
are in a bull market.
Gold: Correct. Gold stocks
usually move ahead of me so it is easy for me to make a decision
which way to go. Take a look at the charts of my gold friends.
These charts show long-term accumulation patterns with recent
huge breakouts.
In the intermediate-term,
I am moving higher while my gold friends are still priced pretty
low. "Pros" want to outsmart themselves and they are
selling gold stocks, not believing in my prosperity. Someone
here is going to be in shock.
OR: Let's discuss your
most recent moves.
To be continued
Important
note:
We would like to give credit to Ron Meisels, President of P&C
Holdings, who first came out with this kind of presentation.
--------------------------------------------------
Let's keep it simple. It's all about supply and demand.
Olaf Sztaba
June 18, 2003
E-mail: olaf@olafinvest.com
Website: www.olafinvest.com
About Olaf Sztaba
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321gold Inc
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